An important ingredient in many business transactions is the creation and exchange of various forms of capital. A traditional measure of capital is one's holdings of financial assets such as cash and securities. In many business transactions, however, an equally important form of capital is the ownership of intellectual property. Such intellectual capital consists of assets of intellectual value for which monetary value is sometimes difficult to determine, such as patents, trademarks, and accumulated knowledge.
To support certain business transactions, a business or organization must have a means of exchanging one form of capital for another. This may involve the exchange of one form of traditional financial capital for another, such as offering cash for shares of stock, the exchange of financial capital for intellectual capital, such as buying consulting time or patent rights for cash, or even exchanges that involve only intellectual capital, such as offering consulting time for the rights to a patent.
While existing securities exchanges and other financial markets provide a medium for offering and selling traditional financial capital assets, the marketing and sales of intellectual capital has been a manual, ad hoc process. One impediment to the exchange of intellectual capital is the description and registration of the capital itself. Whereas financial capital such as stocks and bonds have well-defined descriptions and registration mechanisms, intellectual capital typically enjoys no such media and mechanisms.
Another element that affects the exchange of capital is the relative level of knowledge of the bargaining parties. In conducting various forms of business transactions, the value of information or capital being offered by each of the two parties depends in part upon the knowledge each party has of the other. When an entrepreneur seeks venture capital, for example, the identity of a firm offering that capital is one factor in determining the value of the capital. The backing of a respected, big-name firm adds legitimacy to the enterprise. If two venture capital firms offer an equivalent amount of money, therefore, and one firm is more widely recognized and respected than the other, the entrepreneur is likely to assign a different value to those two offers. Likewise, when a venture capital firm evaluates an entrepreneur, the credentials of the entrepreneur are a factor in determining the value of the venture. If all other factors are equal, for example, a stake in the venture of an entrepreneur with a proven track record is more valuable than a position in one in which the entrepreneur has never before started a company.
Current automated exchanges are price-driven. In conventional sales systems, the seller offers a product or service for a specified price, and the buyer must meet that price to close the sale. In the Priceline.com model, the buyer names a price the buyer is willing to pay for a product or service, and any of several sellers can elect to offer the desired product or service for the offered price. In automated auctions, any of multiple buyers can offer a price for a particular item, and the item's seller accepts the highest price (or rejects all offers).
In some instances, the value of an asset offered for exchange is relative to the amount of confidential knowledge that one party is willing to provide to another party. Thus, in conducting business, it is often necessary to disclose confidential information between two parties that are not affiliated with a common business, institution or other type of organizational entity. A disclosing party generally submits confidential information to a receiving party such that the receiving party can make a determination with respect to the confidential information. For example, inventors often disclose patent applications to manufacturers and entrepreneurs for the purpose of selling or licensing the invention and entrepreneurs often disclose business plans to investors for the purpose of obtaining funding for the business venture documented in the business plan. In these types of situations, the disclosure of the confidential information must be conducted in a manner that limits the potential for the confidential information to be misappropriated, made public or otherwise handled in a manner that adversely affects the interests of the disclosing party.
The evaluation of a business plan or patent application typically involves a number of preliminary and intermediate decisions being made during an evaluation period prior to a final decision to, for example, fund a business endeavor or to license or purchase rights to a patent application. These preliminary and intermediate decisions are typically made based on a select portion of the confidential information rather than the confidential information in its entirety. At various phases in the evaluation of a business plan or patent application, only a limited and known portion of the confidential information is used for making the determination to continue with or discontinue the evaluation. Consequently, the disclosure of the confidential information in its entirety at the inception of a business relationship is generally not necessary or desirable. In instances where the confidential information is disclosed in its entirety, the disclosure of the confidential information not used to make the immediate decisions may unnecessarily and unknowingly adversely affect the proprietary position of the disclosing party.
A confidential disclosure agreement (also sometimes referred to as a non-disclosure agreement) is often used as an instrument for facilitating the disclosure of confidential information. The confidential disclosure agreement defines a set of mutually agreed upon terms under which the confidential information is disclosed between two or more parties. The confidential disclosure agreement typically sets forth terms such as the length of time of confidentiality between the parties, the purpose for which the confidential information is being disclosed and the conditions under which one party may disclose and/or use the confidential information without the consent of the other party. In general, the intent of a confidential disclosure agreement is to clarify the expectations of each party associated with the disclosure of the confidential information.
In many business transactions, information is communicated over one or more computer networks. Computer networks such as the Internet present a particularly difficult arena for disclosing confidential information such as business plans and patent applications. The unsecure nature of many computer networks presents valid degree of concern with regards to communicating confidential information. Information, confidential or otherwise, may be intercepted by an unauthorized party while the information is being transmitted from a disclosing party to a receiving party. Even once the information is received by the receiving party, unauthorized personnel may have ready access to the information. Whether the information is intercepted by an unauthorized party during transmission or accessed by an unauthorized party once received by the receiving party, the disclosure of confidential information in its entirety in a single communication can lead to serious and irreparable damage to the disclosing party's interests. This is particularly true with respect to the rights associated with patents and opportunities associated with business plans.
Another example of an asset that is difficult to exchange is a trade or service name. Trade and services mark registers are maintained by the federal government and each of the several states of the United States. Availability of names for use as a trade mark or service mark must are available if not identical to or deceptive similar to a name previously registered. Names for use as the name of a corporation or other legal entity or as an assumed business name are registered with each of the several states and in the case of assumed business names, by counties. In most states, no automated system exists to cross reference reservation and use of a name for a corporation or other legal entity with names registered as an assumed business name or names protected by common law. Names used commercially may be protected by common law without registration if prior commercial use is established.
The legal community and business owners and entrepreneurs and others who service them are faced with a time consuming and laborious task when searching for availability of a name for use within a state and certainly regionally or nationally for any of the purposes mentioned. For example, availability of a name on the Federal Register for Trade Mark or Service Mark does not mean that name is available in each of the several states of the United States; consequently, a search must be made of each of the states in which the business plans to make use of the name. One difficulty is the making of a search of the data base of each of these governmental agencies. Another difficulty is a search of names in other data bases for legal entities and assumed business names as well as data bases for names maintained at the state and county level.
When a search locates similar names used by others, a difficulty often arises in arranging for the use of the name, such as by the offer, sale and/or transfer of the rights to use names. A person or company desiring to acquire the legal rights to a protected name often must perform an investigation to track down the legal owner in order to open negotiations. This process requires the use of all means of communication—telephone, mail, e-mail, fax, and face to face negotiation conferences and is often inefficient and consumes capital and many person hours. The expenditure for tracing may prove fruitless because the owner of the legal rights cannot be found, or when found the owner is not interested in sale and transfer of their legal rights. Similarly, in instances where the law forbids the use of a name that is deceptively similar to another name already in use, a difficulty is presented by the analysis of the factors which are considered to determine similarity and whether the similarity is deceptive.